Small and medium-sized enterprises (SMEs) are Europe’s job engine. Today, 85% of net new jobs in the EU’s private sector are created by SMEs. For this reason, the EU has created a number of programmes to promote a better economic environment for the 21 million SMEs in the EU, and support their efforts for creating new jobs. The European Commission helps SMEs find necessary funds for their development through a loan guarantee scheme under the Competitiveness and Innovation Framework Programme (CIP, 2007-13). The scheme has already supported more than 200 000 SMEs with a loan volume exceeding €12.5 billion. The Commission also seeks to develop a framework for efficient, diversified and improved long-term financing for SMEs by helping to attract more private investment.

On the occasion of today's conference "Europe works for SMEs" in the European Parliament, this memo discusses Commission initiatives launched in 2013 to help SMEs. They fall under 7 headings:

1. Improving access to finance

2. Unleashing Europe's entrepreneurial potential to bring back growth

3. Missions for Growth: EU businesses benefit from emerging markets

4. Slashing administrative burden

5. Enterprise Europe Network: Key to Europe and the World Support for SMEs to find capital

6. Guidebook Series: Hands-on advice for SMEs

7. No need to change European SME definition

1. Improving access to finance

The European Commission has introduced multiple proposals to give SMEs the help they need to inject more dynamism into Europe’s economy. A joint European Commission/European Investment Bank (EIB) Group report on the activities facilitating access to finance for SMEs in 2012 was presented on 2 and 3 May in Dublin. Further initiatives are:

Access to EU finance single portal now includes information on Structural Funds: From today businesses around Europe will have easier access to much needed finance as the Commission expands the single portal on EU finance to include EU Structural Funds: the European Regional Development Fund (ERDF) and the European Social Fund (ESF). Launched last month, the single portal on EU finance provides easy, complete and up-to-date information on how entrepreneurs and SMEs can access over €100 billion of EU financing from various 2007-2013 EU programmes. Today’s additions will double the number of partner banks and funds to over 1 000, further strengthening a vital information source for SME financing through guarantees, loans and venture capital (see also today's press release "Helping businesses to access EU finance: single portal now includes Structural Funds")

Giving SMEs tools to combat late payments: Both within and outside their own borders, SMEs are particularly vulnerable to late payments – one of the leading causes of bankruptcy among SMEs. The lack of protection for SMEs not only cripples businesses and stalls economic growth, but might also discourage would-be entrepreneurs from taking chances. Every day across Europe, dozens of small and medium-sized enterprises (SMEs) go bankrupt because their invoices are not paid. As a result, jobs are lost and business opportunities remain unexploited, stalling our return to economic growth. In March, in an effort to combat late payments in commercial transactions, Directive 2011/7/EU entered into force. It compels public authorities to pay for goods and services within 30 calendar days or, in very exceptional circumstances, within 60 days.

Support for debt recovery across borders: Many SMEs are reluctant to operate outside the borders of their own country, as they are afraid of encountering burdensome procedures when trying to claim payments for their products and services. SMEs often find it too daunting, complicated or expensive – because of consulting fees, legal counsel, document translation, etc. – to pursue legal action against companies or individuals in other Member States. The Commission has kicked off a campaign to inform SMEs how to take advantage of existing laws and tools in order to more easily and successfully pursue debtors in other countries.

2. Unleashing Europe's entrepreneurial potential to bring back growth

To return to growth and higher levels of employment, Europe needs more entrepreneurs. New companies, including SMEs, create more than 4 million new jobs every year – the biggest source of new jobs in Europe. Recognising the integral role entrepreneurs play in economic recovery, the Commission launched the Entrepreneurship 2020 Action Plan. A combination of investments, regulatory advances and educational opportunities, the Action Plan will help return economic growth to Europe.

Entrepreneurship education is key to a sustainable economic upswing: Education is an essential element of entrepreneurship. Studies show that students who receive entrepreneurship education are not only more likely to be later employed, but also more likely to start their own companies. With that in mind, the Commission has proposed a series of actions that will help expose students to entrepreneurship and, as a result, help create jobs throughout Europe.

3. Missions for Growth: EU businesses benefit from emerging markets

The world’s fastest growing economies are not in Europe. And that’s why the European Commission is committed to opening doors for European enterprises around the globe. The Commission has sent representatives and business delegations to emerging markets in Africa, Latin America and Asia. The insights they gain will help EU SMEs capitalise on external growth – which, in turn, will spur growth here in Europe. In an effort to help EU businesses penetrate foreign markets, the Commission is further organising missions to a number of countries with fast-growing economies. Commission Vice President Tajani has just completed a visit to Russia, accompanied by a 120 strong business delegation (MEMO/13/559). Later in 2013 he will go to China, India, Vietnam, Myamar and Israel.

Commission helps SMEs enter Asian market: As one of the world’s fastest-growing markets, Southeast Asia offers a wealth of opportunity for European businesses eyeing foreign markets. But despite the potential for growth, the region also poses numerous challenges, including different attitudes towards intellectual property rights (IPRs). To help European SMEs navigate these differences, the Commission launched the ASEAN IPR SME Helpdesk in June 2013.

Commission helps SMEs land safely in China: China has become a key market for SMEs hoping to make a splash overseas. Even so, China poses a series of challenges, including problems with IPR protection and a dizzying web of regulations. But the China IPR Helpdesk, the EU SME Centre and the European Enterprise Network are here to help by bringing the risks – and rewards – of the Chinese market into focus.

Similar activities are taking place with the United States of America, our main trade partner. Specific cooperation areas are being set up, such as the promotion of SME events and business partnering activities, participation in sector-specific or thematic seminars and the exchange of information on SME networking opportunities. As preparations are currently under way to launch negotiations for a Transatlantic Trade and Investment Partnership between the EU and the US, additional opportunities may now arise to strengthen cooperation on trade-related aspects relevant to our SMEs.

Avoiding barriers to global trade: The TBT Agreement (Technical Barriers to Trade) helps prevent unfair, protectionist measures. Administered by the World Trade Organisation (WTO), the TBT Agreement alerts European businesses to potential new regulations and encourages global harmonisation and mutual recognition. European businesses can contribute to the work of the European Commission to avoid technical barriers to trade. This collaboration benefits enterprises large and small.

4. Slashing administrative burden

The Commission wants to simplify life for SMEs by easing burdensome EU laws. Therefore, the Commission carried out a broad consultation in which roughly 1 000 SMEs and business organisations identified the top 10 most burdensome EU laws.

The results of this consultation are being put to good use. The European Commission has already adopted the review of REACH, which reduced the fees paid by SMEs. The network of SME Envoys will actively follow-up the TOP 10 results and make administrative burden reduction a priority in EU Member States. Moreover, the Commission has already given priority to reducing the administrative burden for SMEs – the "Think Small First" principle. Specifically, it works closely with Member States to ensure that time delays and costs for creating a new company are reduced, and to assess avenues to facilitate better market access both within the EU and in non-EU countries.

5. Enterprise Europe Network: Key to Europe and the World Support for SMEs to find capital

The Enterprise Europe Network helps SMEs tap into the internal market and key international markets. An EU-funded business and innovation support network, the Enterprise Europe Network includes nearly 600 local organizations in 53 countries. The Network gives a unique opportunity for EU SMEs to find business and technology partners and to be present in high growth markets. Every year, the Network Partners advise and assist more than 2 million European SMEs.

The Network provides a wide range of business and innovation support services, including access to and information on:

Network members are based in host organisations such as chambers of commerce, enterprise agencies, regional development organisations, research institutes, universities, technology centres and innovation centres. These organizations are firmly rooted in their local business environment, with close links to SMEs and proven capacity in business support. The host organisations make a vital contribution of resources and expertise, and co-finance around 50% of the costs of the Network.

Entreprise Europe Network helps SMEs access EU support programmes

One important role of the Enterprise Europe Network is to advise SMEs on access to EU support. Due to their longstanding experience with EU programmes and financial instruments, combined with their good understanding of local SMEs’ needs, capacities and ambitions, Enterprise Europe Network partners are well placed to provide businesses with the right advice. First and foremost, they can advise businesses on whether they respond to the specific criteria and conditions for EU support and, if so, direct them towards the most appropriate programmes and funding schemes. They also provide further advice and assistance to help businesses apply for support, including assistance in finding potential partners and concluding successful partnership arrangements for participation in European programmes.

Role in Missions for Growth

The Enterprise Europe Network plays a key role in the organization and promotion of the Missions for Growth (see point 3). The Business Cooperation Centres (the non-EU country partners of the Enterprise Europe Network) organized many of the business-to-business events for these missions, and all members of the Enterprise Europe Network are actively engaged in promoting the Missions for Growth. Their good understanding of local SMEs’ needs, capacities and ambitions, enables members of the Enterprise Europe Network to target this promotion at businesses which are best placed to benefit from the full potential of the Missions for Growth. They also provide advice and assistance to SMEs in preparation for their participation in these missions.

Geographical coverage of the Network

The network is present in 53 countries:

There are Network members and partners in all 27 EU Member States and in 8 Countries specifically referred to in Article 4 of the Competitiveness and Innovation Programme: Croatia, FYROM, Iceland, Israel, Montenegro, Norway, Serbia, and Turkey.

Via Business Cooperation Centres, in operation in other non-EU countries (based on Article 21.5 of the Competitiveness and Innovation Programme and financed from their own resources): Albania, Armenia, Bosnia and Herzegovina, Canada, Chile, China, Egypt, India, Japan, Mexico, Moldavia, Morocco, Russia, South Korea, Switzerland, Tunisia, Ukraine and the USA. No financial support is provided to partners in these countries. Negotiations are being finalized with a view to extension of the Network to Brazil.

These guidebooks offer inspiration, tested examples, practical help and hands-on advice gathered by SME Policy expert groups. Many of the best practices identified by these expert groups need financial support for their implementation for which financing by structural funds (ERDF and ESF) is available, in particular at regional level.

Each guidebook deals with a specific area of SME policy and includes suitable examples of recent and similar projects. A general guide is also available in order to provide a broad overview of the way in which the process works.

This series of guidebooks is highly recommended to those involved in SME Policy as well as regional development. They aim to facilitate the funding process of appropriate SME policy measures and initiatives at national and regional level and in general raise awareness of EU SME Policy.

The Guidebooks are available in English and translations in 20 languages are ongoing.

7. No need to change European SME definition

The current definition of a Small and Medium-sized Enterprise (SME) does not need to be (profoundly) revised for the time being. This is the main conclusion of a study presented in Brussels today. An enterprise must fulfil two criteria for being defined as an SME: staff headcount must be less than 250 and turnover has to be less or equal to € 50 million.

The Commission carries out regular monitoring of the implementation of the SME definition. Building on the results of previous evaluations performed in 2006 and 2009, a new independent study was carried out in 2012, which focused on how the SME Definition works in practice in the implementation phase. In view of the development of SME demographics since 2003, the disruption that would be caused by any significant change, the policy of ‘less and better targeted state aid’ and the views of a majority of stakeholders, the study concludes that there is no need for a major revision of the SME Definition at the present time. An eventual update of the EU's SME definition will be necessary to adjust for inflation, labour productivity and changes in the ratio of turnover to balance sheet totals, but these changes are not urgent and may be incorporated into a future revision.